Question for those who recently closed on a VA Loan: Out of Pocket Fees?

[Anonymous]

I've hit the 6 month out mark from when I'll start my mortgage process and I'm hoping some members who've recently closed on VA loan purchases can help me out. We're going for 0% down and I'm VA rated 10%+ so we'll avoid the VA funding fee. 

What did your out of pocket fees look like? 

My last mortgage was FHA well over a decade ago in a buyers market and the sellers made a lot of concessions. Not much out of pocket on our end from what I recall. Only thing I remember is the home inspection. 

[homeloanexpert]

Hello my fellow Vet,

The VA is the best loan in the world. In your case with your service connected disability rating, even better! No VA Funding Fee. Man! I don't have a disability rating, my VAFF was over near $8K when I bought. Think about that savings over the life of the loan you'll have.

Getting back to your question, depending on where you live, that will determine how aggressive you can get with the seller paying your closing costs and any concessions. Remember, the VA loan is the only loan where the seller can actually payoff debt for the Vet, the VA allows seller concessions up to 4%. And that's on top of your closing costs!

Closing costs to include your Prepaids and Reserves (setting up your impound or escrow account are generally 3% of the sales price. The VA loan is the costly buyer a seller to sell to. The VA requires a Clear Termite Report, where FHA and Conventional loan don't. In some cases this could cost the seller a lot of dough. Also, a Vet can't pay a Escrow Fee, etc. 

But if you look online, you will find price reductions across the nation. I mean it's summer time and usually the prices are generally going up. That's not necessary the case right now. Yes there are pockets in the nation where inventory is low and demand is high. But generally speaking, I am seeking sellers more willing to pay closing costs. My best guess is,  7 out 10 of my borrowers getting their closing costs paid. At least for now.

Best wishes to you!

[Anonymous]

Thanks for the great info! 

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@homeloanexpert wrote:

Hello my fellow Vet,

The VA is the best loan in the world. In your case with your service connected disability rating, even better! No VA Funding Fee. Man! I don't have a disability rating, my VAFF was over near $8K when I bought. Think about that savings over the life of the loan you'll have.

Getting back to your question, depending on where you live, that will determine how aggressive you can get with the seller paying your closing costs and any concessions. Remember, the VA loan is the only loan where the seller can actually payoff debt for the Vet, the VA allows seller concessions up to 4%. And that's on top of your closing costs!

Wow! I was under the impression 4% was specifically for the closing costs. 

Closing costs to include your Prepaids and Reserves (setting up your impound or escrow account are generally 3% of the sales price. The VA loan is the costly buyer a seller to sell to. The VA requires a Clear Termite Report, where FHA and Conventional loan don't. In some cases this could cost the seller a lot of dough. Also, a Vet can't pay a Escrow Fee, etc. 

But if you look online, you will find price reductions across the nation. I mean it's summer time and usually the prices are generally going up.

We'll be ready to start the process in December since we can end our lease or change it to month-by-month in Feburary. I've heard those months are a good time to be on the buyers side of the mortgage process.  

That's not necessary the case right now. Yes there are pockets in the nation where inventory is low and demand is high. But generally speaking, I am seeking sellers more willing to pay closing costs. My best guess is,  7 out 10 of my borrowers getting their closing costs paid. At least for now.

In a situation where the funding fee is waived, no down payment, and the seller pays the closing costs, what would that (potentially) leave the Vet responsible for? 

Best wishes to you!

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[homeloanexpert]

On my closed VA loans in this month, the borrower's only out of pocket cost was the Home Inspection. All other fees were paid by the seller to include the VA Appraisal.

[Anonymous]

Did this happen to also included the earnest money deposit (new construction lot)?

[JVille]

Writing an Earnest Money check!

[homeloanexpert]

Happily, the Borrowers I was referring to were able to get all their EMD back. But that just depends on your total costs and how you negotiated your contract.

[VALoanMaster]

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@Anonymous wrote:

Did this happen to also included the earnest money deposit (new construction lot)?

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The actual truth is you will have out of pocket expenses for several things upfront.

1) Earnest Money Deposit.

2) Home Inspection.

3) Septic Inspection if the home is not on city sewer.

4) Well water test if the home is on a well.

5) The appraisal.

The good news is all of this money can be refunded to you at closing provided you have enough closing cost concessions from the seller to cover everything.

On paper it looks good to say my clients didn't have any out pocket expenses on their VA loan because the seller concessions covered all of it BUT the truth is, they still had to front money & that's an important distinction to make because most people will need to budget for those expenses.

[Anonymous]

I am currently in the process of purchasing a home using my VA loan and I am "Conditionally Approved" with a closing date of Aug 26th. While I have not received the conditions I am almost certain they just need insurance information. The process so far has been relatively easy.

Here is what I can tell you from my experience so far:

1. I am purchasing a new home (250k) which required a 2k builder deposit. This $ will be applied to the property taxes at the time of closing.

2. The builder and preferred lender are covering 5k of the closing costs which covers almost everything outside of the VA funding fee (rolled into loan). This includes things like the appraisal, inspection, title insurance, title examination, etc...

3. Total closing costs break down like this:

- Total Cost: 10,211

- Minus VA funding fee (rolled into loan) 5,351

- Minus Deposit 2,000

- Minus Seller Credits 3,000

Cash to Close: -140

So far the way everything is written I  will actually be getting a little over a hundred dollars refunded to me at the time of closing!

Out of pocket was 2k for the deposit. I think I may need around 350.00 for the HOA at closing but I am not quite sure if that is taken care of yet.

With all that being said I would imagine out of pocket expenses for you with no funding fee should be limited to whatever escrow/deposit would be required for the property you are interested. There is the possibility of property taxes (depending on how the loan is written) and HOA fees if applicable. This is on new construction so the 5k in credits came in handy, not sure if the costs that this covered could be rolled into the loan or not. 

P.S. Always always inquire about incentives geared towards veterans! I got the builder to include all appliances including washer/dryer and the refrigerator.

I hope this helps!